Bitcoin is the oldest cryptocurrency and also currently the biggest by market capitalization. Litecoin is another cryptocurrency that shares some similarities with Bitcoin, but in what ways are they also different?
This guide focuses on the two cryptocurrencies, with emphasis on their similarities and differences. Maybe you know about the two of them already but you wish to learn more about what sets them apart? Read on to find out.
About Bitcoin
Bitcoin is the top cryptocurrency and has been in that position for years. Being the first ever cryptocurrency created, it is natural for it to be ahead. Bitcoin uses a proof-of-work (PoW) consensus mechanism, which has been criticized for its energy consumption.
The process uses specialized computers to mine blocks and add them to the blockchain. This process results in new Bitcoins coming into circulation as part of the reward paid to miners for their help with securing the network.
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Bitcoin was first created as an electronic peer-to-peer cash for payments, and has a limited supply, and is capped at 21 million coins. This means that only 21 million BTC can be mined, and the number has almost been exhausted already.
The network has a block time of roughly ten minutes, and a block size of 1 MB. The block time is how much time it takes to mine a block, while the block size is how much space is available to carry transactions in a block.
Because of Bitcoin’s limited block size, the network started becoming congested at a point, making transactions slow, which defeats the initial purpose of the network.
About Litecoin
Litecoin is one of the top 20 cryptocurrencies, and one of the most well known. It was created out of Bitcoin through what is known as a hard fork. Bitcoin is commonly referred to as digital gold, and Litecoin was created to be the silver to Bitcoin. This doesn’t necessarily mean that Bitcoin is superior to Litecoin though.
As a matter of fact, Litecoin was created as an alternative to Bitcoin with a lot of improvements on areas where Bitcoin fell short. Like Bitcoin, it is a peer-to-peer digital payment network, but it has some improvements to it.
For example, Litecoin has a block time that is four times less than that of Bitcoin, which means that transactions on the network are four times faster. This is because Litecoin uses a different protocol to mine, even though it mines coins like Bitcoin.
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The relatively high transaction speed also leads to lower cost of transaction, since fees are usually higher when the network is congested.
Similarities Between Bitcoin and Litecoin
Bitcoin and Litecoin share many similarities because Litecoin was forked from Bitcoin. Even though the network has been modified, the following are some of the similarities between the two networks.
Block Size
Even after the fork, Litecoin never increased its block size, so it has a block size of 1 MB, same as Bitcoin.
Mined Coins
Both Bitcoin and Litecoin are mined cryptocurrencies, even though they use different methods to achieve their goals.
Differences Between Bitcoin and Litecoin
Even though Litecoin was derived from Bitcoin, they have more differences between them than similarities. The following are some of the differences.
Maximum Supply
Bitcoin’s supply is capped a 21 million, while Litecoin is capped at 84 million coins, four times the supply of Bitcoin.
Block TIme
Both blockchains have a block size of 1 MB, but their block times vary. Bitcoin’s block time is roughly 10 minutes, while Litecoin’s is 2.5 minutes.
Mining Method
Bitcoin uses the PoW consensus mechanism and SHA-256 algorithm to mine, while Litecoin uses a modified version known as Scrypt.
Final Thoughts
Wondering what’s the difference between Bitcoin and Litecoin? These are the similarities and differences between the two cryptocurrencies.if you’re looking for speed, Litecoin is the answer but if security is your priority, Bitcoin is the best choice.
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